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> China’s single party structure could liberalize capital controls faster than expected if incentives increased enough, which would enable faster internationali
by audunw 3y ago
> China’s single party structure could liberalize capital controls faster than expected if incentives increased enough, which would enable faster internationalization of the Yuan.
The article kind of fell apart there. No, being authoritarian doesn’t mean it’s easy for the party to do whatever it wants. It doesn’t let them pull off magic tricks. In many ways it’s harder to do the right thing because they can’t kick the responsibility down to the next government.
China has known that they need to fix the housing market bubble for a decade now. Most likely the only way to fix it is to let it crash. But they can’t. Their legitimacy depends on GDP growth.
They’re barely keeping the economy together as it is, and they’re showing clear signs of being absolutely desperate to avoid a collapse. Liberalising capital controls at this point would almost certainly lead to enormous capital flight, which would be a self-sustaining downward economic spiral.
- keepamovin 3y agoI think a valid question is does China actually want the US dollar shift? Wouldn't it be trouble for them too? Anyway, maybe I misunderstand what you're saying, but I think you're exaggerating it. The claim is pretty restrained, only that internationalization would be "faster". It's not saying it can do it overnight. You're right that the structure makes it accountable to the people, and it fears losing their mandate. But to suggest it's on the precipice of disaster would be false, and seems like a consolation to avoid facing the uncomfortable reality of shifting power. If anything, they've shown their ability to deftly handle a series of challenges and make competent successful decisions over decades. It's painful to view that if you see them as adversary, indeed, but if you want to compete you have to view them realistically, not through rose-tinted glasses of a consoling delusion of their imagined decrepitude, no offence! But maybe I'm straw manning you and boxing you in with all those "China-crash hopium" conspiracists, I'm sorry! How have I misunderstood you?